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Will the Real International Criminals Please Stand Up?

As the U.S. government and pharmaceutical companies continue to aggressively protect and enhance the power and profits accruing to major players in the international drug industry, a genuine critical assessment of the sources of market distortion and criminality which endanger people’s health is more important than ever.

What gets labeled "criminal" is ultimately a political choice. I do not mean to suggest the label has no value or is simply based on bias or ulterior motive. An act is categorized as "legal" or "illegal" as a consequence of the purposeful establishment of law. And, in this spirit, we should never stop questioning what we try to establish through law—or considering the type and degree of penalty leveled for particular "criminal" acts.(Book jacket)

This observation is particularly relevant to drug control in light of the U.S. government’s relationship with the pharmaceutical industry.

Take, for example, the Obama Administration’s recently unveiled program for drug control, entitled “The Strategy to Combat Transnational Organized Crime.” The current government considers drug control a crucial component of a larger struggle against global threats of all kinds: “Due to the enormous profits associated with drug trafficking, the illegal trade is also a way to finance other transnational criminal and terrorist activities.”

At a press conference (below) John Brennan, Assistant to the President for Counter-Terrorism and Homeland Security, elaborated the threat posed by crime and drugs:

Transnational Crime threatens the world economy. The sophistication and business savvy of these criminals led them to enter markets, undermine legitimate competition and market integrity, which can damage and distort financial systems and legitimate competitiveness. Transnational criminals also are stealing intellectual property, which is not only bad for business but can be deadly, especially in the cases of counterfeit pharmaceuticals.

Brennan describes a clear, black and white, division of the world between legitimate and illegal business sophistication, good and bad business, legal profit and theft. The centrality of drugs to this formulation is striking: Entrepreneurial criminals with business savvy use the illegal drug trade to fund terrorism. Counterfeit pharmaceuticals threaten public health along with the profits of the legitimate pharmaceutical industry. In response, the new strategy must “place spe­cial emphasis on IPR violations.” IPR, or Intellectual Property Rights, are a primary tool for extending patent protection to established "legitimate" U.S. pharmaceutical manufacturers.

Similar arguments have been put forward by the American Pharmaceutical Manufacturers’ Association and the U.S. Trade Representative in their efforts to have trade agreements contingent on aggressive pharmaceutical IPR protection.

U.S. trade officials, drug control strategists, and the pharmaceutical industry, attempt to enshrine a particular definition of the legitimate drug business that has proven to be very contentious.

Why is this definition so contentious? Brennan suggests what is bad for business can be deadly, but he omits another truism: what is good for so-called "legitimate" business can also be deadly. There are many examples of this in the drug market.

Guadalupe A. Lopez has carefully detailed the history of negotiations over IPR protections in free trade agreements, and explains “the pursuit of high levels of IPR protection has exacerbated the inaccessibility of medication by keeping more affordable, generic drugs off the market.” When U.S. drug patents price needy people out of the market, they undermine peoples’ ability to secure their health and livelihoods. Organizations like Public Citizen have documented the economic, social, and political stakes attached to the global struggle to secure affordable medicines.

Another issue is the way the drug control strategy report defines “legitimate competition.” It laments unfair competition from illegal operations while failing to question the unfair advantage enormous U.S. companies wield in the market. As Steven Dudley, of InSight Crime, points out: despite the repeated “alarm bells the administration sounds about TOC [Transnational Organized Crime] having an unfair competitive advantage in legal markets . . . there is no recognition of the unfair competitive advantage big agribusiness has in the home countries of these groups (and the United States), which may have contributed to unemployment and thus the creation of these large, illegally armed groups in the first place.”

A similar claim can be made of established pharmaceutical companies that wield their considerable economic and political power to undermine competition from generic drug makers. This "legitimate" market distortion has not gone unchallenged. The Federal Trade Commission is currently considering unilateral action after failing in both the federal courts and Congress to end so-called "pay-to-delay" agreements whereby brand-name drug makers pay generic companies to drop patent challenges. Internationally, governments and non-profit organizations havechallenged such market distortions and their negative health consequences, with some limited success as occurred earlier this year in India.

These challenges raise interesting questions. Does a national government become a "Transnational Criminal Organization" when it defies the vision of market legitimacy the U.S. government advocates? When the Brazilian government overrides a U.S. pharmaceutical company’s drug patent to protect the “public interest” and provide affordable treatment to needy people, is this a crime? The answer is unclear and disputed—crime in this context is decidedly a contested category. Brazil remains on the U.S. government’s “watch-list” for IPR violations in relation to the pharmaceutical industry, as is India, the other major generic drug manufacturing country in the world. Yet both defend their marketing of generic drugs as legitimate and neither yet, to my knowledge, has been labeled “criminal” by U.S. officials.

Readers may think it a stretch to link discussions of the established pharmaceutical industry, illicit drug trafficking, and debates over generic drugs. However I am simply following the logic of the U.S. drug control strategists themselves, who repeatedly make the link, in order to expose its contradictions and turn it upside down.

Perhaps the most damning example that what is "good for business" in the drug industry is often dangerous, even criminal, is found in a study by the National Legislative Association on Prescription Drugs. This study documents the astronomical rise in criminal sanctions against the so-called legal pharmaceutical industry over the past two decades. The “enormous scale of this wrongdoing” was discerned through tracking federal and state criminal and civil actions against major pharmaceutical companies.

(It is important to point out that this study did not include international crimes—which also have been documented. Most recently Pfizer agreed to pay an unprecedented settlement to Nigerian victims of an unethical and deadly drug trial involving the use of an experimental drug when a well-established “gold treatment” already existed for meningitis.)

The study documents legal sanctions of a value greater than $1 million leveled against pharmaceutical companies by U.S. courts between 1991 and 2010. The report attributes rising drug costs for American consumers over the same time period in part to the illegal actions of these firms. Furthermore, the biggest offenders (GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough) are “among the world’s largest pharmaceutical companies.” The pharmaceutical industry has overtaken the defense industry as the “biggest defrauder of the federal government under the False Claims Act (FCA).” The largest financial penalties at the Federal level have been related to the criminal promotion of drug consumption for conditions not labeled on their packaging, and at the State level the largest penalties are related to Medicaid fraud. The report, not surprisingly, has received little publicity since its release in December 2010.

The so-called "legitimate" pharmaceutical industry has been involved in activities that endanger public health, undermine the capacity of governments to provide adequate health care or protect people from dangerous drugs, while fleecing federal, state, and local governments already in serious financial difficulty. Of course pharmaceutical manufacturers have also produced many drugs that provide invaluable benefits to human health. But the point is that the seemingly obvious black and white line between legitimate and illegitimate business practice is far from established.

As the U.S. government and pharmaceutical companies continue to aggressively protect and enhance the power and profits accruing to major players in the international drug industry, a genuine critical assessment of the sources of market distortion and criminality which endanger people’s health is more important than ever.

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